The latest report from IntelliChoice can help bad credit auto loan buyers navigate through the waters of the various certified pre owned programs offered by car manufacturers
Bad credit meets used cars
At Auto Credit Express, we’ve spent the last twenty years helping consumers with bad credit raise their credit scores and reestablish their car credit by financing a vehicle with a bad credit car loan. Along the way, we’ve tried to educate consumers on the loan process, since these very same consumers begin with a distinct disadvantage due to the high interest rates charged by these loans.
During that time, we have also seen a shift in the types of vehicles these lenders will finance. While earlier “buy here pay here” dealers usually had lots full of older, high-mileage vehicles that were barely above “beater” status, modern special finance lenders usually require either new or newer, low-mileage used cars that today’s new-car dealers are happy to sell.
And even though many bad credit lenders are willing to finance a new vehicle, we realize that, because these same vehicles are more expensive than their pre-owned counterparts, a majority of bad credit car loan shoppers will end up purchasing a used car. This phenomenon is not necessarily a bad thing. Over the past 20 years, used cars have become much more reliable. Advances in assembly techniques, quality control and reliability mean that even the average car can be expected to last at least 100,000 miles, with many vehicles capable of lasting much longer.
And when you combine this with the fact that the average new car loses between 15% and 30% of its value as soon as you drive it off the lot, we can see why so many bad credit car loan shoppers decide that it is more cost effective to finance a 2 or 3 year old pre-owned car rather than a new one. But once that decision has been made, those same consumers are faced with another decision: should they buy a regular used car or a certified pre-owned car?
Certified pre owned
Genuine certified pre-owned cars are vehicles that are either traded-in or returned off-lease (once the new car lease is finished) to the dealer who is franchised to sell those same models. Once the dealer decides to buy them back from the leasing company (leased models) or from the customer on a trade-in (retailed cars) knowing that they’ll qualify for the CPO program based on certain factors (year, mileage and general condition), these vehicles then go through an inspection and certification process that involves replacing worn and broken parts in order to qualify for the manufacturers CPO vehicle status.
Because of these more stringent requirements, certified pre-owned vehicles are more expensive than their non-certified counterparts. The costs of an inspection, the required replacement of warn and defective parts as well as a fairly expensive service contract all add to the price of a CPO vehicle. But even given these additional costs, many bad credit car loan customers find it hard to put a price on the peace of mind buying one these vehicles can bring.
With that in mind, IntelliChoice.com has just published the winners of its 11th annual ranking of manufacturer-sponsored CPO programs. And even though IntelliChoice ranks both luxury and non-luxury vehicles, only the non-luxury brands are listed here, since these are the most appropriate vehicles for bad credit car loans.
While the “overall winner” and “best” categories are fairly self-explanatory, the “100% inspection score” category is based upon the manufacturers required inspections versus a baseline inspection scorecard developed by IntelliChoice as well as the following criteria:
Extended manufacturer warranties
Certification inspection process
Roadside assistance – special financing
Return exchange policies
And the non-luxury brand winners are:
Overall Winner: MINI and Volkswagen (Tie)
Best Warranty: MINI
100% Inspection Score: Ford, Mercury, Nissan, and Suzuki
Strongest Brand Quality: General Motors and Honda (Tie)
1. MINI (Tie)
1. Volkswagen (Tie)
“Volvo, Mini, and Volkswagen continue to dominate the rankings with a focus on consistency and quality in their programs,” said Eric Andersen, senior analyst, Intellichoice.com. “We are very impressed with the improvement Kia has made with a relatively new program. Kia now joins Hyundai in the top five non-luxury programs and demonstrates a strong and aggressive push from the Korean manufacturers to strengthen their brands in the U.S.”
The Bottom Line
With the number of vehicles available to bad credit car loan shoppers, consumers will have to decide, for themselves, if the added retail price of a CPO car is worth the expense. For now, the information contained in the IntelliChoice.com report should serve as a guide for consumers shopping for a pre-owned vehicle and hoping to get financed with a bad credit car loan.
For more information on bad credit car loans as well as the bad credit auto loan buying process, visit our web site at www.autocreditexpress.com.
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